Life Insurance Corporation of India vs GHANASHYAM NAIK

THE order of the District Forum directing the appellant to pay to the respondent the full assured amount under two policies along with interest @ 12% per annum and cost of Rupees 1,000 is the subject matter of challenge in this appeal.

THE respondent is the husband of late Kusum Naik. She had secured two Insurance Policies bearing Nos. 591048077 and 591048107 dated 15.7.1997 for Rupees 50,000 each. THE life assured died on 10.12.1999. When the respondent as the nominee lodged claim with the appellant, the appellant repudiated it on the ground that the life assured at the time of submitting the proposal did not inform that she had another insurance policy of the year 1996. The District Forum held that the appellant''s agent took the proposal forms with the signature of the deceased Kusum Naik and subsequently handed over the policies.

The limited question that arises for consideration is whether non-disclosure of existence of another policy amounts to suppression of material fact in the facts and circumstances of this case. It is the specific case of the respondent that the appellant''s agent took the proposal forms from his deceased wife after taking her signature. It has been the practice that the life insurance agents take the proposal forms and fill in the same without asking relevant questions to the proposer. This being the reality, the deceased life assured canot be held guilty of suppression of material fact. Moreover, existence or non-existence of a previous L.I. policy is not relevant, so as to invalidate subsequent policies. For the reasons mentioned above, we do not find any merit in this appeal.

THE District Forum has imposed interest @ 12% per annum and cost of Rupees 1,000. Considering the facts and circumstances, we reduce the rate of interest to 6% and direct the appellant to pay to the respondent a consolidated amount of Rupees 25,000 towards interest and costs. THE appellant shall pay to the respondent principal amount of Rupees 1,00,000 (one lakh) for both the policies together with a consolidated amount of Rupees 25,000 (twenty five thousand) as mentioned above by 30.4.2007, failing which the operative part of the order of the District Forum shall work out. There is no merit in this appeal, which is hereby dismissed. Appeal dismissed.